Critics of benefits cap win concession but £26,000 limit stays

THE government has thrown out changes to its controversial welfare reforms made in the House of Lords, but was forced into making a concession over its flagship policy of setting a cap on benefits of £26,000 a year.

Once the changes come into force in April 2013, people who lose their job will be given a nine-month grace period to find work before the cap is imposed, employment minister Chris Grayling said.

Workless families currently receiving payments at a level above the cap will be given support to make them understand the need to find jobs before the April 2013 deadline.

At Prime Minister’s Question Time David Cameron challenged Labour to support the threshold, saying: “The cap is right and the cap is fair.”

A Lords amendment, which was led by Church of England bishops and removed child benefit from the cap, was overturned by 334 votes to 251, majority 83.

Mr Grayling said the public “overwhelmingly” supported the government’s stance to introduce a benefits cap at £26,000 a year, equivalent to a gross salary of £35,000.

He said Labour had been guilty of “flip-flopping” on the issue, initially supporting a benefits ceiling before the party’s peers supported an amendment in the Lords to exclude child benefit from any cap.

Last night, it was one of a series of amendments thrown out by the coalition, but only after the concession on capping by the government to quell a potential rebellion by some Tory and Lib Dem MPs.

However, it did not prevent eight Lib Dem rebels joining Labour MPs voting against the government on some Lords amendments, including Argyll and Bute MP Alan Reid. The government claimed last night that the fast turnaround on the bill meant that reforms would not be delayed despite the Lords’ objections.

The government also saw off changes suggested by the Lords to its proposals on disability payments and the Employment Support Allowance (ESA) for those who have had hospital treatment.

The changes to ESA had led to criticisms that cancer patients would be forced to go back to work.

Mr Grayling said that families would receive a 12-month grace period to find work, while those who lose their job through no fault of their own after being employed for a year would be given nine months in which to find new employment.

Meanwhile, households entitled to working tax credit would be exempted from the cap along with working households on universal credit after 2013.

War widows and widowers would also be exempted, while households receiving the support component of (ESA) but not receiving disability living allowance would also not be penalised, he said.

“Excluding child benefit will only dilute our aim that being in work must always pay better than relying on benefits alone,” Mr Grayling told MPs

Setting out Labour’s position, shadow work and pensions secretary Liam Byrne said: “We are in favour of a benefit cap, but we like a cap that doesn’t backfire.”